Creditcard Issuers Still Fighting to Rip You Off

There is currently legislation being considered that would take away more of your consumer protection against the shennanegans of credit card companies. Take a look at this. In case I didn't tell you, creditcards are the ticket to bankruptcy, even if you are financially conservative.

Have You Been Ripped Off By Universal Savings Bank?

They have a program for creditcards that offers a free computer if you open an account. They claim the computer is more valuable than it really is, and sets up holders of these creditcards to pay much more for the computer than they would have ever agreed to pay. If you have been exposed to this program or have a friend or relative who has, then you might want to talk to this law firm. They are pursuing this and need witnesses.

Lawsuits Galore Against Creditcards

When Congress passed the bankruptcy bill in 2005, what were they thinking? Look at the large number of lawsuits!

Citibank forced to make changes in its marketing practices and cease billing card holders for products never ordered, and is caught allowing mortgage fraud. Class action against MBNA certified for breach of contract, fraud, and other claims. FIRST USA settles for $84.9 million in a class action suits over charges that the bank had illegally hiked interest rates on consumers. FleetBoston loses case over violations of Truth In Lending. NextCard gets closed by the Office of Comptroller of the Currency.

There are many many more cases that show a steady pattern of abuse of customers. On 17 May 2005 there was a US Senate Bank Committee Hearing on Abusive Credit Card Practices. Link to full hearing, download PIRG's testimony, download Credit Card Reform Platform released at hearing by PIRG. In this session MBNA's General Counsel testified that MBNA does not use "universal default", while there were simultaneously many complaints from cardholders to the contrary on many consumer websites claiming the very things that describe universal default. What has Congress done since then? NOTHING!!!

What is the answer? Don't use creditcards folks! Don't make yourself vulnerable to these oppressors. Proverbs 22:7 is holding true even now.

More Hidden Charges on your Creditcards

When you make charges on your creditcards in a foreign country, there are fees hidden in the currency exchange. Exchange rates fluctuate all the time, but the charge is made to your account in U.S. Dollars. When that is done, the bank charges a 1% currency-exchange fee, then on top of that, they most likely tack on another 2% for overseas purchases. The fees are extremely difficult to find on your statement because they aren't listed. They also don't make it easy to see in the cardholder agreement either. Like many other creditcard company policies, they aren't clear. Sometimes they aren't even expressed to you until you complain about them. Bankrate.com reports that there are currently a number of lawsuits over this currency exchange policy. However, don't believe their propoganda that creditcards are still cheaper. If you understand what simply having the account open is costing you, it is cheaper to avoid creditcards.

The Perfect Storm

The ruthless unfair business practices of credit card companies, may come back to roost when merchants who accept creditcards fight back. A lawsuit was filed back in Sept. 2005.

Premiums on Creditcards

Here is an example website that could be the king of deceptive advertising. When you do, however, take a close look at the fine print. Be careful not to let yourself be tempted. Even the creditcards fine print won't give you all the information you need. Remember that there are numerous trap doors which will invalidate the deal after you have opened the account. The creditcards fine print has a lot of conditions to the offer. In the end, I think you'll find that the creditcards actually use this as a vehicle for selling things over their retail price. Remember with whom you're entering into a contractual relationship; companies with a background of fraudulent dealings, largely ignored by our government. (see how Citigroup helped Enron commit fraud.) These companies are plagued with Class Action lawsuit judgments against them so much, they seek to deprive you of the right to a fair hearing in a court of law in their adhesion contract by putting in mandatory arbitration clauses. This is going too far. It has become legal loan sharking.

Bankruptcy Law in Shambles

What happens when the creditcard industry writes the laws? According to judges, its called anarchy. See this article. Creditcards are the modern tool of empire building, instead of guns. The more we use our creditcards, the more power we give our creditcards.

Deceptive Advertising

The banks that issue creditcards are somehow above the law, it seems. They can put tons of deceptive ads on TV, in magazines, and in our mailboxes without consequences. See what this blogger found when he analyzed one of his creditcard offers. If you don't believe creditcards are the kiss of death financially, you need to take a closer look at who you're doing business with.

Credit Ratings Protect Creditcard Companies

Think about it. We fret over our credit rating, and even strategize on how to make our credit rating as high as possible. When you really get into this, you discover that the credit bureaus don't work for a government agency, aren't interested in consumer protection, and in effect will ignore everything you tell them unless the law requires a response. Even then their response is nothing more than what is legally required.

The credit bureaus work for the banking industry. Those are the customers that pay their bills. The information found in your credit report is going to be slanted, if at all possible, to allow the bank to charge you higher interest. The mistakes on credit reports are to their benefit, and they could care less if they are errors. Correcting your errors takes aggressive and highly motivated action on your part before they are corrected, unless you are lucky, or a celebrity, or special VIP flagged by the bureau.

Those who use credit reports to determine the credit worthiness of a potential renter or otherwise judge the character of an individual - remember this. Credit reports are inaccurate.

Another Secret Profit Stream for Creditcards

Merchant fees, another way consumers who are conned out of their money, regardless of whether they use creditcards...

"Credit card companies do not want merchants to charge credit card users more than they charge other customers, even though the merchant pays a fee of 2 to 3 percent (merchants negotiate an exact percentage with their banks) to process credit payments. In some countries this fee may be significantly more. If customers were responsible for this fee, it would often discourage credit card usage. Some critics have observed that this results in what is effectively a hidden tax on all transactions conducted by merchants who accept credit cards since they must build the cost of transaction fees into their overall business expense. The end result is that cash consumers are essentially subsidizing credit card holder purchases. The cost of the convenience enjoyed by card holders and the profits taken from transaction fees by the card industry (which has come to rely increasingly on this revenue stream over the years) is partially offloaded onto the backs of the cash consumer. Critics go on to say that further compounding the issue is the fact that the consumers most likely to pay in cash are the least able to afford the additional expense (card holders are more likely to be affluent, non-card holders less so)." Wikipedia Article

The argument that using cash is subsidizing profits this way, is just propoganda to encourage the use of creditcards. The less creditcards are used, the less the subsidy would need to be. Consumers who use creditcards pay a lot more than they realize for that convenience, in many hidden ways.

Issuing Creditcards by Deception is a Way of Doing Business

As I mentioned in a previous post, Citigroup has a track record of being anti-consumer, and even has involved itself in fraudulent business practices. Unfortunately, Citigroup is not alone. American Express, and many other companies are doing the same now. It is amazing what kinds of patterns you'll find if you do a little digging. One of the groups, World Financial Group, is an outlet for many financial services companies that tolerate deceptive and fraudulent activity.

My discovery of the problems with creditcards, is just part of the picture. I have to say though, that creditcards are the most successful tool for the industry that I can see. As Edward Yingling of the American Bankers Association says, "But I think it is generally understood that those that use the revolving part of the credit card are kind of the sweet spot". Take a few minutes and look at this video slot by Frontline. (If you are on dailup, try this link) Deception is a way of business.

Sue Issuers of Creditcards for their Reports to Credit Bureaus

Are your creditcards playing havock with your credit report? First get rid of them. Then clean up your credit report. You might even be able to get agressive with your cleanup in small claims court. See this website for details.

I don't usually recommend being litigious, however, if you don't defend your legal rights and you let these companies trash your finances by trashing your credit report, it enables their abuse. It harms your family. The biblical way to approach this kind of disagreement is to approach the party and attempt a resolution - by all means do that first. What you will most likely find is that they won't cooperate. If you can't come to a resolution and they won't submit to biblical principles in their treatment of you, then the scriptures allow you to sue. It is a last resort.

However, you may want to consider the wisdom of these scriptures.

Isa 59:44
No one sues righteously and no one pleads honestly.They trust in confusion and speak lies;They conceive mischief and bring forth iniquity. NASU

1 Cor 6:7
7 The very fact that you have legal disputes among yourselves shows that you have failed completely. Would it not be better for you to be wronged? Would it not be better for you to be robbed?TEV

1 Cor 6:1
If any of you has a dispute with another, dare he take it before the ungodly for judgment instead of before the saints?NIV

This is a tough spot to be in. Just avoid creditcards altogether, because you entagle yourself with those who have intent to trap you. Once your trapped, there is no sure way out of your dilemma.

How To Get Out of Debt - Another way

This website has a seminar about eliminating creditcards. Consider some of their options for eliminating creditcards from your life, if you haven't already.

Should We Prosecute Banks for Suicides?

How many suicides are prompted by excessive debt? With issuers of creditcards seeking out those who are likely to default, so they can collect more fees should be held responsible. Here is an article that agrees.

A College Education on Creditcards

Creditcards are sold to college students, even though 24 states have passed legislation between 1999 and 2001 limiting solicitation, they are still targets. The issuers of creditcards want to get them young. If they see creditcards as part of life, they'll see creditcards as a necessity.

Teach your children, starting in first grade, that creditcards are NOT money. Teach them that creditcards are to be avoided. It is going to take an exaggeration of this because there is so much advertising on TV and in the mail, not to mention the attitudes taught in our public schools when economics are taught. Then there is peer pressure to deal with. As parents, we must counter the trend. A teenager with creditcards can bankrupt their parents. It is documented in court cases that parents are held responsible for their minor children's debts - regardless of the illegal contracting of the minor.

Think Creditcards Have Better Fraud Protection?

Consider this case where a hacker accessed millions of accounts at major creditcard companies and how these creditcard companies took a rather nonchalant attitude toward the problem. What makes this such a large number of accounts is the consolidation of the creditcard industry. It also explains their complacency toward the problem.

Citigroup has been consolidating into every area of banking, and sharing customer information across businesses. To top it off they have been lobbying congress on issues that allow them more freedom to share customer information, rather than protect it. Since the 1999 Financial Services Modernization Act, banking has destroyed the intent of the 1933 Glass-Steagal Act prohibiting banks to participate in both wholesale and retail banking, which came out of the Great Depression to protect us from a repeat of the depression. It has also neutralized the 1927 McFadden Act that restricted interstate banking. This is not a consumer friendly operation.

It has also ventured into the MLM business, widely fraught with fraud, to sell investments. It is on a mission to consolidate power, and siphon off the wealth of Americans. That is why they issue creditcards. Creditcards have become the tool to accomplish their mission. They don't care one iota about fraud protection, it is only a public relations tool.

Creditcards an Invitation to Fraud

Just take a look at a website called Ripoff Report. The sheer volume of complaints by people is staggering. It is convenient to use creditcards, but it is also convenient for thieves to make fraudulent charges and it is easy for the issuers of creditcards to make unauthorized charges. Don't kid yourself, it is up to the issuer of creditcards to determine whether charges are fraudulent. If they disagree with you, they win, period. You are not in control.

The most deceptive part of all this is the Universal Default clause in agreements for these creditcards. They can determine you have defaulted on our agreement by simply having a falling FICO score. In a default, all deals are off. Your interest rate skyrockets, fees fall from the sky, and your credit gets trashed if you aren't careful. It is a trap, that is extremely profitable for the issuers of creditcards. It is the ultimate ripoff because Congress won't do anything about it, nor will the OCC who oversees the banking industry. You're on your own. You should just close all your creditcard accounts. Creditcards are financial traps.

Paying Off Creditcards Makes a Difference

Do you want to get back at the issuers of creditcards? Pay off your creditcards. A Wall Street Journal writer, Robin Sidel, reports that issuers of creditcards suffer when customers pay down their balances on their creditcards.